Points of View: Are Indians ready to buy refurbished goods?

By Saumya Tewari , afaqs!, New Delhi | In Digital | October 30, 2015
Refurbished goods are not brand new products. But, nor are they second-hand products. They fall in between the two categories. And, with digital platforms trying to promote and organise the segment, will the ever-sceptical consumer give it a chance? Industryspeak.

Alexander Souter, managing director and co-founder,

Alexander Souter

I do not think there is any market as ready for refurbished goods as the Indian market. All major cities in India have unorganised players in markets like the Ghaffar Market (New Delhi) or variants of these types of markets, which thrive on the refurbished goods segment.

There has always been a huge demand for refurbished products in the Indian market, a lot higher than in any other market across the globe, even before online players like us came in. We are trying to organise this segment by bringing a consistent quality standard.

The Indian customer is value-focussed and is pretty well educated about products. The refurbished category allows consumers to buy a product, which is not brand new, but of the same quality, and at a 30 per cent discount. I think quality, warranty and trust is what online players are bringing to this category.

And, with the arrival of the smartphone, the single most popular product in the segment, followed by mobile accessories and unboxed products, this market is opening up.

Solomon Wheeler, vice-president, marketing and communication, Lava International

Solomon Wheeler

There is a demand for refurbished mobile handsets in the market. However, the current supply is not able to match that. Product returns due to hardware or software failures is ultimately a cost to the company, and therefore, in the long run, any brand would like to see this trend going downward.

At Lava, too, there is a huge focus on product quality and, therefore, this is not a big market for us. At the moment, we do sell a small volume of refurbished devices in an organised manner with 100 per cent transparent communication to the customers in terms of reduced warranty period and discounted price of the product.

The primary mode of this communication is retailer education and the packaging itself.

Shivani Suri, director, marketing, eBay India

Shivani Suri

The refurbished market in India is yet to get big. According to several studies, the e-commerce market will be upwards of $115 billion by 2020, assuming that there is a return rate of 10-15 per cent. The refurbished category will be valued between $12 and $15 billion.

It is therefore, a huge business opportunity, especially in Tier II and Tier III towns where prospective customers aspire to own branded products at discounted prices. It is these consumers who will drive the category in the Indian market.

In the first phase, eBay India has introduced live refurbished product listings largely in mobile, laptops and tablet categories. The company will eventually expand into home appliances, gaming consoles and even clothing segments.

There is a huge growth potential in the category, but the biggest challenge for organised players is to create awareness among consumers.

K Vaitheeswaran, e-commerce consultant, and founder of Indiaplaza

K Vaitheeswaran

There is a lot of potential in this category because in India, there are many who do not have the spending power to buy high-end gadgets for full price.
It makes sense for such customers to buy refurbished products, rather than second-hand ones. However, there is a certain scepticism associated with the category and due to lack of proper knowledge, consumers may refrain from buying refurbished goods. The challenge will be to create awareness and build trust about the category.

And, the best way to build the trust is when manufacturers like Sony or Samsung support refurbished products and create awareness. However, I feel, it is almost impossible for them to do it.

Sharad Talwar, Head-Consumer Services, HCL Services

Sharad Talwar

The phenomenal growth in e-commerce in India has resulted in significant increase in returns/DOA (Dead On Arrival) goods, which in turn has expanded the market for refurbished goods. These returned goods are repaired, re-packed/ re-branded and sold on fresh warranty terms. The consumer off take for such refurbished goods will increase only if they are confident that the spare parts used are genuine and the warranty back up is reliable.

As of now, the market for refurbished goods will need a lot of investment to bring about a change in consumer behaviour. The value proposition for the consumer has to be established and his confidence gained. This will be boosted by presence of well-established brands providing genuine spare parts and credible after-sales warranty.

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